This document summarizes a study on the financial performance of selected automobile companies in India. It includes an introduction stating that financial performance is a measure of how well a firm generates revenues from its core business. The document then discusses various financial ratios that were analyzed for selected automobile companies like Ashok Leyland, Bajaj Auto, Hero Motorcorp and TVS Motors. These ratios include liquidity ratios like current ratio and leverage ratios like debt ratio. The findings suggest that while the companies maintain good short-term solvency, they use long-term funds for purposes other than acquiring fixed assets.
This document summarizes a study on the financial performance of selected automobile companies in India. It includes an introduction stating that financial performance is a measure of how well a firm generates revenues from its core business. The document then discusses various financial ratios that were analyzed for selected automobile companies like Ashok Leyland, Bajaj Auto, Hero Motorcorp and TVS Motors. These ratios include liquidity ratios like current ratio and leverage ratios like debt ratio. The findings suggest that while the companies maintain good short-term solvency, they use long-term funds for purposes other than acquiring fixed assets.
This document summarizes a study on the financial performance of selected automobile companies in India. It includes an introduction stating that financial performance is a measure of how well a firm generates revenues from its core business. The document then discusses various financial ratios that were analyzed for selected automobile companies like Ashok Leyland, Bajaj Auto, Hero Motorcorp and TVS Motors. These ratios include liquidity ratios like current ratio and leverage ratios like debt ratio. The findings suggest that while the companies maintain good short-term solvency, they use long-term funds for purposes other than acquiring fixed assets.
INTRODUCTION Financial Performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. Financial decisions which increase risks will decrease the value of the firm and on the other hand, financial decisions which increase the profitability will increase value of the firm. Risk and profitability are two essential ingredients of a business concern. There has been a considerable debate about the ultimate objective of firm performance, whether it is profit maximization or wealth maximization. MEANING 1.Finance is the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. 2. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal finance.
IMPORTANCE OF FINANCE 1. It helps in obtaining sufficient funds at a minimum cost. 2. It tries to generate sufficient profits to finance expansion and modernization of the enterprise and secure stable growth. 3. It also ensures safety of funds through creation of reserves investment of profit, etc.
Uses of Financial Management 1. Anticipating financial needs. 2. Acquiring financial resources. 3. Allocating funds in Business. 4. Administrating the allocation of funds. 5. Analyzing the performance of finance. 6. Accounting and Reporting to management.
Need of the Study 1. Financial analysis is the powerful mechanism which helps in ascertaining the strengths and weakness in the operation and financial position of an enterprise. 2. Financial statement analysis is largely a study of the relationship among the various financial factors in a business as disclosed by a single set statement and a study of the trend of these factors as shows in a series of statement. 3. Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss accounts.
Limitation of the study Time was one of the limitations of this study. Because of the lack of time the analysis is based on the secondary data collected from the balance sheet, profit and loss accounts and other records from the organization.
Review of Literature
1. The study was intended to probe into the financial condition-financial strength and weakness-of the Indian Auto-mobile industry. 2. An attempt has been made in this study to analyze the important variables of Automobile industry and projected future trends regarding sales and profit for the next 10 year periods, with a view to help the policy makers to take appropriate decisions. 3. It is conceptualized that sustained growth, adequate liquidity and requsine profitability in the SME sector is significantly related to their investment and financing decisions. RESEARCH METHODOLOGY
1.RESEARCH Research is a process in which the researcher wishes to find out the end result for a given problem and thus the solution helps in future course of action 2.RESEARCH DESIGN The research design used in this project is Analytical in nature the procedure using, which researcher has to use facts or information already available, and analyze these to make a critical evaluation of the performance.
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3.OBJECTIVES OF THE STUDY To analyse the liquidity position of selected companies. To analyse the profitability position of the leverage selected companies. To analyse the leverage position of the selected companies. To analyse the turnover position of the selected companies
4.Scope of the study The scope of the study is to analyse the financial performance of the company. Automobile industry and also ascertain the development of financial position of the company. 5. Limitations of the study The time duration of the study is limited. The financial statement and annual reports are taken into consideration
RATIO ANALYSIS
Ratio analysis is an accounting tool, which can be used to measure the solvency, the profitability, and the overall financial strength of a business, by analyzing its financial accounts Accounting ratios are very easy to calculate and they enable a business to highlight which areas of its finances are weak and therefore require immediate attention
1.LIQUIDITY RATIO
1. Current Ratio Current ratio=Current Assets/Current Liabilities.
2. Quick Ratio Quick Ratio = Current Assets - Inventories/Current Liabilities.
3. Cash Ratio Cash Ratio=Cash and Cash Equivalents/ Current Liabilities.
4.Net Working Capital Networking Capital = Current Assets Current Liabilities 4.Net Working Capital Net Working Capital=Current Assets Current Liabilities
Suggestions The companies may use debt so that may attract the shareholders. Because of good liquidity position, so it can meet out its immediate obligations.
CURRENT RATIO
COMPANY NAME
YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO
TVS MOTORS 2008-2009 3670.92 1175 3.124 2009-2010 4363.11 1318.89 3.308 2010-2011 6179.48 980.35 6.303 2011-2012 7126.20 1053.1 6.776 2012-2013 7065.00 942.9 7.492 FIXED ASSETS TURNOVER RATIO CHART FINDINGS Analysis of financial statements leads to some findings which indicate the performance of the company in certain aspects. Long term solvency : This shows that company is using long term fund for other than acquiring fixed assets. Short term solvency : Short term solvency ratios are in more than the comfort level. Most of them are above the recommendable levels. Activity Ratios : Activity ratios of the company are giving different pictures about the utilization of the resources.
Conclusion
The financial performance of the companies should be developed from one year to next year. The financial analysis helps an organization 1.0 improve its financial strength. A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee. The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments.